The U.S. House Financial Services Committee is expected on Tuesday to pass a revamp of the Dodd-Frank Wall Street reform law, but the bill is not anticipated to receive President Barack Obama's signature if it ever reaches his desk.
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The bill, introduced this summer by the committee chairman, Republican Jeb Hensarling, would allow banks to choose between complying with Dodd-Frank or meeting much tougher capital requirements.
Dodd-Frank, which was passed in the aftermath of the 2007-08 financial crisis and economic recession, has been the target of ire by Republicans and some banks.
Critics say Congress went too far in its attempt to clamp down on Wall Street and prevent another financial meltdown and that the law imposes overly burdensome requirements and gives regulators too much power.
Corresponding legislation to Hensarling's bill has not been introduced in the Senate.
Dodd-Frank is one of Obama's signature pieces of legislation and the Democratic president would be unlikely to sign the measure if it made its way through both chambers of the Republican-led Congress.
In July, the top Democrat on the committee, Representative Maxine Waters of California, said the bill "recycles every bad idea this committee has ever generated, adds a few more bad ideas on top, and creates an omnibus of special interest giveaways that invites the next financial crisis."
Hensarling's bill would also throw out the Volcker Rule that restricts banks from making speculative investments and eliminate the authority of the Financial Stability Oversight Council consisting of regulatory agencies' heads to designate firms as "systemically important," also known as "too big to fail."
On Tuesday, the committee will finalize the legislation before sending it to the full chamber for a vote.
Federal Reserve Governor Daniel Tarullo has said the 10 percent capital ratio that banks would need in order to opt out of Dodd-Frank under the legislation is too low.
The legislation is part of a larger debate about financial regulation's future after Obama leaves office in January. On Monday, the U.S. Chamber of Commerce released an outline of what it expects from the next for regulation, a document that resembled much of Hensarling's bill.
"The new administration will have a chance to measure whether the financial regulatory system is working, both as a driver of economic growth and systemic stability," said David Hirschmann, who heads the Chamber's capital markets branch.
(Reporting by Lisa Lambert; Editing by Peter Cooney